Aim-listed African Gold is in negotiations with an African mining company in relation to a possible reverse takeover.

The new entity would have a value of approximately £60 million, (€88.87 million) compared with the current market capitalisation of African Gold of more than £16 million.

Trading in the shares was suspended yesterday morning, 45 minutes after African Gold had issued a statement confirming it is in talks with Mwana Africa Holdings. Prior to the suspension the share price rose by 25 per cent, to £6.25.

Mwana Africa Holdings is a private company owned by wealthy African shareholders and run by a former Anglo-American plc engineer, Kalaa Mpinga, the son of a former prime minister of Zaire, Kasenga Mpinga.

Africa Gold is a UK-registered resources company with its headquarters in Dublin and with interests in Zimbabwe.

Mwana Africa owns a nickel mine and a gold mine in Zimbabwe, as well as gold, copper and diamond interests in the Democratic Republic of the Congo and Angola.

Mwana Africa, meaning sons of Africa, was set up about four years ago. The reverse takeover of Africa Gold would give the company access to London finance for a number of high potential projects with which it is involved.

The combined entity would have approximately 3,000 employees.

The chief executive would be Mr Mpinga, the chairman would be Oliver Baring, currently joint executive chairman of Africa Gold, and John Teeling, Mr Baring's co-executive chairman, would be a non-executive director.

Approximately one-third of Africa Gold's 3,000 shareholders are Irish and the company has Irish management.